In 2017, National Defense Authorization Act (NDAA) made a radical change to the way states divide the military pensions of divorcing spouses. Before the NDAA, states had the discretion of dividing pensions of divorcing military personnel as they saw fit. Now, the federal government has not only imposed significant restrictions, it has also changed the military pension division rules of 45 states.
Historically, these states divided military pensions using the Time Rule Formula as stated under the Uniformed Services Former Spouses’ Protection Act (USFSPA) of 1982. The formula has been the source of criticism in the past because it allows the ex-spouse to benefit from any increases in rank and time-in-service pay of the military member long after the couple ended their marriage.
Let’s suppose a couple divorces while the military member spouse is an Army Captain with four years of service—all through which the couple were married. Under the old rule, the divorce court could award the service member’s wife 50 percent of his pension and base the corresponding dollar amount not on the husband’s rank at the time of the divorce (i.e. Captain) but the rank at the time he retires. Let’s assume again that spouse rises to the rank of Army Colonel and retires after 20 years of service. Even if the service member divorced his spouse 16 years ago, she would still collect the retirement benefits the Colonel earned with 20 years of service.
Moreover, this award was irrevocable. Even if the military service member were to remarry and stay married to another spouse for the next 20 years, the first spouse would still be entitled to half of his military pension.
The NDAA, on the other hand, implements what’s known as the “Frozen Benefit Rule,” rewriting the USFSPA and stating that a service member’s rank and number of years spent active are “frozen” at the time of the divorce. So, using the same example above, the new rule would limit the share of retirement benefits the non-military spouse can collect to 50 percent of the service member’s pension as a Captain with four years of service. It cannot be based on the total value of his pension at the time that he retires with a higher rank and more time-in-service pay.
This rule, however, is not retroactive, applying only to divorces finalized after the NDAA was signed into law.
What Does This Mean for Military Divorce in Texas?
Nothing. The frozen benefit rule is already in effect in five states, namely Florida, Kentucky, Oklahoma, Tennessee, and Texas. The NDAA applies to all military personnel in the service, including the Army, Navy, Air Force, Marine Corps, Coast Guard, National Oceanic and Atmospheric Administration (NOAA), and Public Health Service’s Commissioned Corps.
If you or a loved are serving, or have served in the military, and want to learn more about what this law could mean for your retirement benefits upon a divorce, talk to the legal team of the Lyttle Law Firm today. Schedule a consultation with a Texas divorce lawyer by calling our offices at 512.215.5225.